Stein Mart rebounds with profit in 2Q

JACKSONVILLE, FL — Staging a comeback from a first-quarter loss, Stein Mart Inc. recorded a second-quarter profit of $10.9 million, but earnings still declined by 21.4 percent from a year-ago profit of $13.8 million, the bottom line weighed down by thinning margins, higher costs and rising interest expense.

Lifted by nine new stores opened this year, sales advanced by 10.1 percent, to $320.7 million from $291.2 million last year. Same-store sales edged up by 1.5 percent, up against a year-ago gain of 12.8 percent.

Reflecting the hit-or-miss retail environment, same-store sales "went from mid-single-digit positive during April to negative during June," the company reported. And moving into the third quarter, same-store sales remain negative in July. This trend, if it persists, the company said, will put at risk its current assumption of low-single-digit same-store sales growth for the second half of the year, and its ability to hold earnings flat with year-ago levels.

Putting the bite on profits during the period, average gross margin eroded by 120 basis points, to 27.1 percent from 28.3 percent the prior year. But given a lift from the added sales, gross margin dollars still increased by 5.6 percent, to $86.9 million from $82.3 million. At the same time, costs climbed higher by 90 basis points, rising to 22.5 percent of sales from 21.6 percent a year ago.

Adding another modest level of pressure, interest costs, while still low, climbed higher by 15.2 percent, to $900,000 from $781,000.

"We believe the concern about the economic climate reduced traffic into our stores, despite our excellent spring merchandise selection," said chairman and ceo Jay Stein.